Sunday, August 10 1997; Page C06

The Substantive defects and political strong points of the budget deal the president struck with Congress are the same. The substantive problem is that the plan partakes of contradictory goals. In broad economic terms, it tends to cancel itself out; what is done on the one hand is undone on the other. But the same contradictions that neutralize it enable it to be sold in many different directions at once. At least in the short run, that's its great political virtue.

The all-things-to-all-men quality of the plan was amply displayed this week, not least at the president's Wednesday afternoon news conference. Are you among those who think that, in mindless pursuit of a political target – a balanced budget by the year 2002 – that has no real economic significance, the president agreed to spending cuts that jeopardize important social goals? This plan "includes the largest increase in college aid since the GI bill 50 years ago, the largest increase in children's health since Medicaid was enacted . . . over 30 years ago," the president said.

And he's right, so perhaps you're among those who think the opposite, that the spending restraint in the plan is fake, and under the false flag of balance, the budget will continue to grow as before. "Let me remind you," the president said, "let me just go through this quickly – when you adjust for inflation, all these departments with discretionary budgets are going to have to cut spending 10 percent during this budget," and sizable "entitlement savings" will be made in Medicare.

That, too, is right. If it's also the case that the savings in Medicare aren't enough to keep the program whole for very long, well, there's to be a commission to figure that out. And, no, the cuts in so-called discretionary spending for roads and parks and tax collection and all the rest – those aren't spelled out, either, but not to worry. "Some things will be increased, many things will be decreased, and if we do it, we'll produce growth." Pretty hard to be against that.

The tax side of the deal is likewise on a split screen. "Eighty percent of this tax cut goes to three things which will benefit the vast majority of Americans – education, the children tax credit and the initiatives to help isolated and distressed urban and rural communities. That's where 80 percent of this cut goes." No hint there of the great Republican give-away to the rich on the strength of which the administration itself was critical of this bill. And, in fact, in the first few years the bulk of the tax cut will indeed go to middle-income families. But then the backloaded tax cuts favoring the better-off that are at the heart of the bill begin to take effect, and the figures change. Long term, the bill will be much more costly than the deceptive figures for the early years suggest, and much less fair.

When fully effective, this is legislation that will add to the deficit it pretends to reduce, and benefit the rich far more than the trophies to which the president points will benefit the middle class and poor. But the bill contains enough else to obscure these long-term effects. That's the political genius of it, and why the genius and defects are the same.